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Increasing Support for Those on Lower Incomes: Is the Saving Gateway the Best Policy Response?
Author(s) -
Emmerson Carl,
Wakefield Matthew
Publication year - 2003
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2003.tb00082.x
Subject(s) - government (linguistics) , incentive , gateway (web page) , economics , intervention (counseling) , public economics , economic interventionism , finance , savings account , business , microeconomics , computer science , medicine , politics , political science , philosophy , linguistics , psychiatry , world wide web , law
The government is committed to introducing a new savings account for people on lower incomes. This will provide a strong incentive for eligible individuals to save, or at least to hold financial assets, in these accounts. This paper describes possible rationales for this government intervention. It then presents new evidence on the characteristics of people with lower incomes and finds that many already have some financial assets, while those who do not often appear to have good reasons for why they may not want to be currently saving. The result is that the proposed Saving Gateway will be extremely difficult to target at those who might benefit in the way the government hopes. The danger is that the policy will be expensive relative to the number of genuine new savers and savings that it generates.